Tahiliani is credited with being one of the designers who have brought high couture to India. His I-T woes began in October 2000 when he sought tax exemption for his income that he declared as Rs 83.90 lakh. Under Section 80 RR of the Income-Tax Act, a resident of India, who is an author, playwright, artist, musician, actor or sportsperson can claim exemption of 75% of his income earned from foreign assignment. Tahiliani said that applying the exemptions, his taxable income for that year would be Rs 53.24 lakh.
The I-T department refused to accept that the fashion designer was an artist. It also contested deductions sought by Tahiliani on his taxable income for 1999-2000 and 2001-2002. The I-T appellate tribunal ruled in Tahiliani's favour, upholding his claim that he was a creative artist. The I-T department challenged the order before the HC. The advocate for the department contended that a fashion designer did not belong to the creative profession as the vocation was classified under applied arts and not fine arts. The I-T department said the benefit of exemption was granted to artists who represent Indian culture in foreign countries.
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